Enron Essay

Submitted By Sramirez1
Words: 2582
Pages: 11

Who should pay? Enron's Chapter 11 filing automatically freezes all suits against the company itself while the bankruptcy is resolved. But while Enron may seek the same protection for its executives, lawyers predict that the attempt will fail and that the individuals will have to fend off a raft of suits. Some think that criminal charges are a possibility for former executives like Skilling and Fastow. But such cases require proof of "knowing, willful, intentional misconduct," says well-known defense attorney Ira Sorkin. And a criminal case requires a much higher standard of proof than a civil case: proof beyond a reasonable doubt rather than a preponderance of the evidence. That's a high bar, especially since Enron executives will probably claim that they had Enron's auditor, Arthur Andersen, approving their every move. With Enron in bankruptcy, Arthur Andersen is now the deepest available pocket, and the shareholder suits are already piling up. On November 28, 2001, at the end of the day's trading, Enron's stock price took a sharp and irreversible nosedive. Dynegy, another Houston energy company, was originally going to merge with them, but when Enron's financial problems came to light, Dynegy promptly broke off the deal. Without it, there was no way to address the billions of dollars in debts that Enron were required to pay in 2002, and their credit rating plummeted as a result. This caused an almost total devaluation of Enron stock, which ended the day with a price of $0.61 per share.
In February 2001, Jeffrey Skilling was moving up in the world. He had given up his long tenure as Enron's chief operating officer to assume the mantle of CEO, a first-class title if there ever was one. Then, a mere six months later, he resigned the post. Prior to the resignation, he had allegedly dumped 450,000 shares for an estimated $33 million, but he assured stockholders that his resignation had "nothing to do with Enron," citing the ever-popular "personal reasons" for his hasty exit instead.
In a company, as on a ship, the man at the top is the captain. So when the ship sinks, he must hold his head high, man up and sink with it. Unless of course, he's Ken Lay, in which case the thing to do is plead ignorance and then blame someone else. In an interview with "60 Minutes," he declared that the company's chief financial officer, Andrew Fastow, had orchestrated all the shenanigans, with Lay none the wiser. Attorney Bill Lerach, who sued Enron's accountants, didn't buy it. "This is what I call the Elmer Fudd defense," he said. "I went to work every day and was paid $6 million a year and had a Ph.D. in economics -- and somehow, despite all of this, I didn't know anything that was going on."
In May 2004, justice was served. Well, sort of. A class action lawsuit was filed on behalf of over 20,000 employees who had lost a combined $2 billion in pension money. However, the judge only awarded them $85 million. This broke down to just over $3,000 per person, a fraction of what the employees had lost.
In September 2008, Enron reached a settlement in a $40 billion lawsuit filed on behalf of a large group of shareholders. The award was just over $7 billion dollars, which came out to under $5,000 per person when split among 1.5 million plaintiffs. However, Coughlin Stoia Geller Rudman and Robbins, the law firm that represented them, received $688 million in fees, the largest amount ever received in a securities fraud case in the United States.

When Enron sold assets at a September 2002 auction, everything was up for grabs, including staplers, an air hockey table, coffee mugs and so forth. But surely, the ultimate trophy that day was a stainless-steel "tilted-E" sign that once stood sentry-like outside of one of the company's satellite offices. The sign sold for $44,000 to an employee of Microcache Computers on behalf of his boss, who had instructed him to "just do anything to get it." Among the other attendees at the auction was former employee